Re Secretary, Department of Family and Community Services and Pearce

[2003] AATA 972

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2003] AATA 972

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No N2003/936

GENERAL ADMINISTRATIVE  DIVISION		)
Re		Secretary, Department of Family and Community Services

Applicant

And Brett Pearce

Respondent

DECISION

Tribunal Ms SM Bullock, Senior Member

Date              8 September 2003

PlaceSydney

Decision For the reasons given orally at the conclusion of the hearing, the Administrative Appeals Tribunal pursuant to section 43 of the Administrative Appeals Tribunal Act1975 affirms the decision under review.

..............................................

Ms SM Bullock      

Senior Member

CATCHWORDS

SOCIAL SECURITY – Lump Sum Compensation – Preclusion Period – Special Circumstances

Social Security Act 1991(Cth) s 1184K

Re Beadle and Director-General of Social Security (1984) 6 ALD 1

Groth v Secretary, Department of Social Security (1995) 40 ALD 541

Re Secretary, Department of Social Security and Hill (1995) 2(1) SSR 9

Re Bland and Secretary, Department of Family and Community Services [1999] AATA 711

Re Secretary, Department of Social Security and Rodgers (AAT 7911, 23 April 1992)

Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464

Re Males and Secretary, Department of Family and Community Services (1999) 57 ALD 793

Re Anderson and Secretary, Department of Family and Community Services [2000] AATA 431

Re Catley and Secretary, Department of Social Security (AAT 12044, 21 July 1997)

REASONS FOR DECISION

8 September 2003   Ms SM Bullock, Senior Member     

1.      At the conclusion of the hearing of the above matter the terms of the decision intended to be made and the reasons therefor were stated orally. The Applicant then requested the Tribunal to furnish a statement in writing of the reasons of the Tribunal for its decision.

2.      The oral reasons for decision have been transcribed by Auscript, the Commonwealth Reporting Service.  Whereas those oral reasons may reflect the inelegance of an extempore decision, they are in fact the reasons for the said decision.

3.      The said transcript is annexed hereunto and furnished to the Applicant and to the Respondent as it is the reasons for the Tribunal's decision.

I certify that this and the preceding page is a true copy of the decision and reasons for decision herein of Ms SM Bullock, Senior Member.

Signed: ……. ………………………………….

Associate

Date of Hearing  8 September 2003

Date of Decision  8 September 2003

Representative for Applicant      Ms C Collis, Departmental Advocate

Representative for Respondent Self-represented

DECISION
ADMINISTRATIVE APPEALS TRIBUNAL
Matter N2003/936
Secretary, Department of Family and Community Services and Pearce
By Ms SM Bullock, Senior Member
SYDNEY, MONDAY, 8 SEPTEMBER 2003

1.      This is an application for review to the Administrative Appeals Tribunal, which I will refer to as “the Tribunal” from now on, by the Applicant, the Secretary, Department of Family and Community Services.  The Applicant has made an application for a review of a decision made by the Social Security Appeals Tribunal (“the SSAT”) which decided on 2 May 2003, to set aside a decision by the Applicant and determine that so much of a lump sum compensation payment be treated as not having been made so as not to extend the preclusion period imposed on the Respondent, Mr Brett Leslie Pearce, beyond 1 July 2003.

2. A telephone hearing was conducted before the Tribunal in Sydney on 8 September 2003 with the Applicant represented by Ms C Collis, a Departmental Advocate and the Respondent, Mr Pearce, who represented himself. Both Ms Collis and Mr Pearce made their appearance at the Tribunal by conference telephone. There was also telephone evidence obtained from the Respondent's wife, that is, Mrs Teena Pearce. There were documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975..  Those documents are referred to as the T Documents and comprise documents T1 through T41.  There was one exhibit tendered for the Applicant and that document was the Secretary's Statement of Facts and Contentions, dated 27 August 2003.  This was made Exhibit A1.

3.      The background to this matter is that on 22 February 2002, Mr Pearce received a lump sum compensation payment in the amount of approximately $175,000.00.  It is noted that an amount of $157,106.10 was deposited into Mr Pearce’s and his wife's joint account on 12 March 2002 and that reference can be found at T9, page 25.  There was a compensation preclusion period applied by Centrelink from 23 February 2002 until 14 January 2005.  There is no dispute about the calculation of the preclusion period and the Tribunal agrees with the SSAT that the preclusion period was correctly calculated.

4.      In evidence, Mr Pearce stated that the compensation paid to him related to a low back and right leg injury, which occurred in late 1995.  Mr Pearce was working at the time as a station hand.  He still suffers from low back problems and also has problems with his right leg, which includes aching, numbness of his right foot, pins and needles and general pain.  Mr Pearce told the Tribunal that prior to his work injury he had problems with gambling, with high alcohol consumption and abuse of amphetamines.

5.      Mr Pearce stated that in about 1990 he had undertaken a period of detoxification in a facility in Woden in the Australian Capital Territory.  He had a second detoxification admission for the same reasons.  The detoxification treatment involved injections, other medication and attending Alcoholics Anonymous and NA meetings.  He thought that each admission was for approximately three weeks.  Mr Pearce told the Tribunal that in relation to the period prior to his accident, while he had gambled and he had abused drugs and also particularly in the form of amphetamines and perhaps some marijuana and including high alcohol consumption he was able to cope with it. 

6.      He also stated that he had money, which was coming in which allowed him to keep up with the expense of these habits.  Following the injury Mr Pearce described having a period of seven years of poverty.  He was not strong like he used to be.  He stated that he had an on-off relationship with his wife which he indicated occurred at various periods though this was not specified.  Mr Pearce stated that he married in 1990.  Mr Pearce told the Tribunal that he had been told of the preclusion period by his solicitor but even so he did not properly understand what this meant and the implications for the future.

7.      He stated that on the one hand he knew that he would not be able to be paid by Centrelink receiving any social security payments but on the other hand he did not fully realise the truth or reality of this preclusion.  He also believed that he would have the use of approximately $40,000.00 in superannuation funds, which he found subsequently was not available to him.  This was not fully understood by the Tribunal in terms of the evidence that Mr Pearce provided.

8.      Mr Pearce stated that when he received the lump sum compensation he wanted to, in effect, buy back the support and affection of his wife and his family.  In this regard he purchased such items as furniture, stereo, a TV, computer for his eldest daughter, he purchased two cars, two motor bikes, toys, “labelled” clothes for the children and paid back debts, for example, an amount of $8000.00 to his parents, debts accruing from fines and he also provided specific money for his two eldest children in the amount of $5000.00 and in the amount of $2000.00 each to the three younger children.  Within about two months of receiving $157,106.10, he had spent it. 

9.      The money accounted for by various goods and articles amounted to a certain amount which was quantifiable but there was other money which seemed to be unaccounted for which, Mr Pearce stated, the expenditure was related. Those unaccounted for funds came from his gambling and from his purchase of drugs and alcohol.  When Mr Pearce was referred to T9 in the T documents which comprise the bank statements of a Commonwealth Bank joint account held by himself and his wife, he noted that there were large amounts of money drawn out from the Commonwealth Bank while there were smaller amounts drawn out at various clubs and hotels.  This related to his gambling expenditure.

10.     For example, Mr Pearce told the Tribunal that he would go to Queanbeyan and he would book into a motel, he would then obtain amphetamines and spend a period of up to three days at various establishments where he would simply gamble.  He noted that in Queanbeyan it is possible to gamble 24 hours per day.  Mr Pearce stated that if he drank more than two beers he would not be able to control his gambling, his drug consumption or, indeed, his alcohol consumption.  It was worse, Mr Pearce stated, that is, his gambling and substance abuse, because of his injury.

11.     He stated that he had also the worry of his brother who some years prior to his work accident, that is Brett Pearce's work accident, had suffered a football injury which resulted in his brother at the age of 21 being paralysed from what Mr Pearce describes as the neck down.  Mr Pearce stated that during the period following his expenditure of all of the funds from the compensation, he borrowed money from his parents.  He in fact lied to them and told them that he had investments which

he did not have and on the strength of that advice to his parents, they loaned him some money.  He is now in a situation where his father has, in effect, cut off all contact with him and Mr Pearce stated that his father has written him out of his will.

12.     Mr Pearce stated that in 1990, this is again prior to the work injury, he was imprisoned for a period for the supply of drugs.  He stated that after that gaol sentence which affected him greatly he came, to use his own words, “good”..  He stated that he never wants to go back to prison again.  In terms of specifically trying to ascertain what was spent on various drug or gambling issues, Mr Pearce stated that he could spend up to $500.00 per day in drugs, that is principally amphetamines and on occasion, as I understand it, marijuana and he could also spend $200.00 in terms of marijuana and he would be buying a carton of beer which would last him two days.  He was also buying rum. 

13.     Mr Pearce described his family constellation and that consists of himself, his wife and five children.  The children are aged 16 years, 13 years, six years, four years and three years.  His eldest daughter and in fact the oldest child is having her education undertaken by correspondence.  The next two eldest children attend school and he has the two youngest children who are still at home.  For the last short period of what Mr Pearce estimated to be about five or six weeks, he has lived in the rural community of Tilba on a farmhouse.  He is away from hotels and he is away from his former associates and mates.

14.     He stated that he has been in receipt of Newstart Allowance since the SSAT decision and that is paid directly into his wife's account, he has no access to that account. He wants to preserve his relationship with his wife and children.  Mr Pearce stated that they are all he has now and he does not want to lose them. Mr Pearce stated that he has had to seek assistance from charitable organisations such as St Vincent de Paul and the Salvation Army.  He gave the example of a recent experience when the washing machine broke down and he was able to obtain assistance from one of those organisations in the provision of another washing machine.  It has been recommended to him by one or both of those organisations that he obtained some assistance by way of financial assistance.

15.     Mr Pearce was questioned about the fact that the lump sum compensation payment was paid into a joint account. He stated that whilst the account was in joint names it was only himself that had access to that account.  He stated that he did that because he knew that if his wife had access to it then she would take the money and she would have no need for him.  It seemed to fit in with his belief that he was trying to make up for or buy the affection and support of his wife. 

16.     It has been suggested, as the Tribunal understands, by the charitable organisations that he also attend some counselling but he stated that he does not want to attend organisations such as AA or NA or indeed Gamblers Anonymous because he is ashamed of this.  He stated that when he was in detoxification he did attend such meetings, he knows exactly what are his responsibilities and, furthermore, he has a number of books or publications which he refers to from time to time, which he believes assist him.

17.     Mr Pearce stated that in recent times he has seen a Chamber Magistrate.  He is in the process of trying to arrange repayments of various debts.  These include to a real estate agent for outstanding debts of unpaid rent in the amounts of approximately $1300.00, $4500.00 and $5000.00.  He also has a fine for “DUI” for which he is trying to negotiate repayment.  He has a solicitor's fee which he is repaying at $50.00 per fortnight and he is repaying $150.00 per month to his father.  He stated that he is very grateful for his children and for his wife, Tina.  At the current time he received approximately $340.00 per fortnight in Newstart Allowance following the SSAT decision.

18.     Mr Pearce told the Tribunal that he realises that he is gullible, that he cannot handle money, that he cannot handle alcohol and that he cannot handle the amphetamines.  He stated that he believes that his worst problem, out of all of those I have just mentioned, relates to his alcohol consumption because once he loses control of that then he is not able to control anything to do with gambling or taking of various illicit substances.  Mr Pearce stated that in relation, for example, to essential utilities such as the car, that has been put in the name of his mother-in-law so that it cannot be sold by himself or, indeed, repossessed. The car is garaged at his mother-in-law's

home but he noted that at the present time his wife has had the car because the children have been ill with the flu or respiratory-type illness.

19.     In cross-examination, Mr Pearce stated that it was nothing for him to spend an amount of approximately $10,000.00 in eight to ten hours during the process of his gambling.  He reiterated on a number of occasions that if he has greater than two or three beers then he is unable to control himself.  He stated that thing are different now in his life because he has realised the error of his ways. What he has done in the past he realised has hurt not only his wife but also his children.  He stated that if the SSAT decision is allowed to stand then in fact he would endeavour wherever possible to repay to Centrelink any money that is provided to him by way of income support. 

20.     Mr Pearce stated that his wife has not been involved in any drug taking.  He agreed that she had been charged because of possession and supply of drugs, but he stated that this related to drugs being found in the house that she, his wife, lived in but that the drugs belonged to another female. The reference for the actual drug charges are to be found at T20, page 45. 

21.     Currently Mr Pearce does not go to any hotels.  They are isolated on a farmhouse and he does not see any other people apart from his wife and family.  He stated that he does not want to see his mates and in fact he is not seeing them.  Mrs Pearce has obtained casual work in the past and most recently she undertook a cleaning position for one day and is hoping for more when the warmer weather comes and there is more demand on the services of a cleaner. He stated that the children are more settled, that he is endeavouring particularly with the older two children to rebuild the relationship.  With the younger children they are more affectionate to him and he cited the recent Father’s Day as an example of that.

22.     Mr Pearce stated that if the SSAT decision is reversed, that is, that the preclusion period stands until January 2005, he would have no other option but to leave the house.  The family would not be able to survive financially. He said that this would be, as the Tribunal understands it, devastating to him.  He would have to go and live on

the beach, catch rabbits or kangaroos to survive.  He said that he realises that he has been reckless, that he has hurt a lot of people. 

23.     I then obtained some evidence from Mrs Pearce. She stated that she married Mr Pearce in 1990.  The relationship has been characterised by his drinking, that is Mr Pearce's drinking, gambling, taking of drugs, associating with “not very nice people” and also the relationship has been characterised by periods of separation.  Mrs Pearce stated that currently she receives an amount of $680.00 per fortnight in family payments.  She has to repay $36.00 per fortnight. I understand that would be by way of withholdings to repay an overpayment debt which arose when she was working.  Mrs Pearce also receives approximately $342.00 in Parenting Payment per fortnight.

24.     The rent currently paid on the farmhouse at Tilba is $200.00 per week and Mrs Pearce stated that she and Mr Pearce and the children have lived there for approximately three months.  She stated it is much better there now because they are all together, it is very quiet, it suits her eldest daughter who has a house.  The eldest son has a motor bike and it is also very good for Mr Pearce, as it is away from the hotels and the influence of his mates.  Mrs Pearce stated that she and Mr Pearce go to town, which she referred to as Tilba, about once a week.

25.     Mrs Pearce stated that Mr Pearce has been the best he has been since they have been together and that for the last three months he will only have one or two stubbies of beer per week.  Prior to that three months period, it was nothing for Mr Pearce to drink and gamble and spend days away from the house at a time and also to come back home with associates whom she said were not very nice people.  Mrs Pearce stated that her husband knows that if he puts one foot wrong now that she will not have him stay with him.  She stated that she will not jeopardise herself and the children again.

26.     Having said that, Mrs Pearce stated that she believes that part of the problem with Mr Pearce started when his brother was injured at aged 21.  Since that time Mr Pearce has not been behaving in a manner which is entirely responsible.  She stated this occurred before she met Mr Pearce.  Mrs Pearce stated that she now manages all

of the family's finances.  Mr Pearce's Newstart allowance is deposited directly into her account and she makes all of the repayments and she also provides money to Mr Pearce.  The Tribunal understands that Mr Pearce gets money for tobacco each week.

27.     She reiterated that Mr Pearce has been much more stable since they have been at Tilba, he is very helpful around the house and with the children.  Mrs Pearce related that Mr Pearce has been to the Chamber Magistrate to try and work out how he can repay his court fines. There have been options discussed about bankruptcy.  They are waiting for the Chamber Magistrate to send them back some written information about this and also any other strategies that might be employed in terms of repayment schedules.  It is the Chamber Magistrate's suggestion also that Mr Pearce attend or obtain the assistance of a financial counsellor and there is one at either Moruya or Bega.  Mrs Pearce stated that they are waiting for advice from the Chamber Magistrate to see what he comes up with before making any appointments to see the financial counsellor.

28.     Mrs Pearce stated that she is aware that her husband had two periods of detoxification.  One she believes was in 1990, which she thought was for about ten days and another in 1996 or 1997, that was after his accident, which she thought was for a period of 14 to 18 days.  Mrs Pearce is not surprised that Mr Pearce spent all of his money on gambling.  Not all of the money was spent on goods for the family, which she acknowledged, the things such as furniture, clothes, toys, computer, cars for the family but she was not surprised that a great deal of the money was spent on gambling and on drinking and the drugs, which principally were amphetamines.  A number of occasions during her evidence and cross-examination Mrs Pearce stated that things are different now because it is very clear to Mr Pearce that neither she nor the family will accept his previous pattern of behaviour.

29.     If he goes back to those old ways then she stated that she will have nothing to do with him and he knows that.  Mrs Pearce stated that on occasions her husband does get cranky but then she suggests he goes for a walk or does something around the house and after he has done that he is much better.  If the SSAT decision was to be

reversed, Mrs Pearce stated that she does not know how the family could cope financially.  There are seven people to be fed and in addition to that there are the debts and also the payment of rent.  She stated that they are slowly but consistently catching up with the debts and this is a very good thing.

30.     Mrs Pearce stated that in relation to the deposit of the compensation lump sum into her husband’s and her joint account, she agreed that that was a joint account but stated that she had no access to it.  The only way that she could get money from it was if Mr Pearce deposited money into what she referred to as the summary account which she held.  She stated that this did not occur. 

31. I now turn to the submissions. Ms Collis submitted for the Applicant that Mr Pearce has been extremely reckless and irresponsible in the expenditure of his lump sum compensation in circumstances where he knew of the existence and the implication of the preclusion period. Ms Collis stated that apart from the impact on the family, that section 1184K of the Social Security Act 1991 (“the Act”) should not be applied to someone in Mr Pearce's circumstances who has been so irresponsible.  Furthermore, Ms Collis admitted that Mr Pearce had a drinking and gambling, and perhaps substance abuse, problem well before the accident and that those were his life choices.  Ms Collis stated that the public finances and public purse should not be called upon to fund this lifestyle choice. 

32. Ms Collis stated that she relied on the Applicant's Statement of Facts and Contentions so far as relevant, following Mr Pearce and Mrs Pearce's evidence. In those contentions, Ms Collis submitted that section 1184K of the Act has been considered on many occasions by the Tribunal and also by the Federal Court. She noted the case in Re Beadle and Director-General of Social Security (1984) 6 ALD 1 where it was held that special circumstances must be unusual, uncommon or exceptional in order to be considered special. Ms Collis referred the Tribunal to a Federal Court case of Groth v Secretary, Department of Social Security (1995) 40 ALD 541 in which the court noted that in considering whether a person's circumstances are special, the decision-maker should look at the effect upon the claimant if the waiver provisions are not applied. If the consequences are unintended by the legislation or the

effect on the person concerned was different from that which might be thought by others then the circumstances may be considered to be special. 

33. Ms Collis referred to the intention of the legislation imposing a preclusion period on the recipient of a lump sum compensation payment being to prevent a person obtaining the benefit of income support payments in relation to a period of incapacity or reduced incapacity for work when they had received a lump sum settlement to compensate them for that same incapacity. Ms Collis further noted that the Federal Court has stated that the circumstances must be unusual, uncommon or exceptional and that they must justify making an exception to the general principles set out in the Act. The entirety of a person's circumstances, rather than one particular factor must be considered before concluding that special circumstances exist.

34.     Considering the issue of financial hardship, that must go beyond what is straightened to be truly exceptional.  Although financial hardship may be grounds for a finding of special circumstances, it is not a prerequisite to a finding of special circumstances and this is referred to in a decision Re Secretary, Department of Social Security and Hill (1995) 2(1) SSR 9.

35.     Ms Collis noted that Mr Pearce was injured on 15 November 1995 and received weekly worker's compensation payments until the settlement on 22 February 2002 in the amount of $175,000.00.  She noted that the Commonwealth Bank statements were in the name of Mr Pearce and his wife and that the funds were largely exhausted by about 21 May 2002, which would amount to an expenditure rate of approximately $2616.00 per day during that period.  Ms Collis further noted that despite telling Centrelink that he was aware of the preclusion period, Mr Pearce managed to spend the entire settlement funds within this very short period of time and thus he was grossly irresponsible.

36.     In relation to Mrs Pearce and her circumstances, Ms Collis noted that until January this year, Mrs Pearce was earning approximately $524.28 up to an amount of $615.00 per week.  Prior to that she had been working with another employer earning approximately $2289.51 per month.  Ms Collis noted that Mrs Pearce is now receiving

the Parenting Payment partnered at $342.80 per fortnight and family assistance payment of $684.04 per fortnight.  In relation to the nature of the expenditure of that lump sum, these circumstances must be taken into account.

37.     It is important to consider, therefore, how the hardship arose.  Ms Collis submitted that Mr Pearce has admitted that he knew he was precluded from receiving compensation affected payments for three years, yet he recklessly disposed of the lump sum payment.  In this regard, Ms Collis noted that there was discretionary expenditure on such items as two motor vehicles totalling $32,000.00; two motor bikes totalling $10,500.00; $28,700.00 was expended on appliances, manchester, clothing, recreational gear in addition to repaying $8000.00 to Mr Pearce's parents; and an amount of $16,000.00 to his five children.  There was furthermore, an amount of $3277.00 paid in fines.  There were also between 13 March and 15 March 2002, unaccounted large withdrawals from Mr Pearce's and Mrs Pearce's joint Commonwealth Bank account amounting to $30,000.00.  Ms Collis noted in her Statement of Facts and Contentions that over $100,000.00 was spent on either discretionary items, fines or was unaccounted for.  An amount of $57,106.00 is unexplained.

38.     Ms Collis then referred the Tribunal to a number of cases.  Particularly, the Tribunal was referred to a case in Re Bland and Secretary, Department of Family and Community Services [1999] AATA 711, in which that Tribunal declined to exercise the discretion in favour of Mr Bland, who had exhausted an amount of $222,857.00 compensation before the expiration of his preclusion period. The money was spent on building a house and approximately $20,000.00 was gambled by his partner. The Tribunal in that case held that the question of whether the hardship suffered by the person was their own making was a relevant consideration. It was also noted in that case that payments of worker's compensation are intended to provide a person with income for the preclusion period, not capital.

39.     In another case Re Secretary, Department of Social Security and Rodgers (AAT 7911, 23 April 1992), the circumstances of that case were that Mr Rodgers had a drinking and gambling habit and the Tribunal refused to grant Mr Rodgers "solace"

because he was clearly the author of the mischief which now troubles him.  Another case reference by Ms Collis is Re Davis and Secretary, Department of Family and Community Services (1999) 56 ALD 793, in which the Tribunal reiterated the distinction between gambling or alcohol addiction and a psychological condition and a lifestyle choice. In that matter Mr Davis received $330,000.00 compensation and had an eight year preclusion period yet he disposed of the full amount within five months. The Tribunal in that case found that there was no evidence that Mr Davis was addicted to gambling or drinking and that his behaviour could only be described as grossly irresponsible.

40.     Other factors that have been considered in other cases to be special include ill health and in the case of Re Secretary, Department of Social Security and Bolton (1989) 18 ALD 464, that Tribunal found that ill health alone is not enough alone to be a special circumstance. Ms Collis submitted that a significant principle behind compensation provisions is that compensation recipients are expected to use part of the settlement award for their income support needs during the preclusion period and they are not able to use taxpayer funded social security payments. Ms Collis submitted that the SSAT had omitted this principle when it made its decision. In relation to other matters, Ms Collis noted that the SSAT had referred to Mr Pearce's ongoing relationship difficulties as a factor which could be considered a special circumstance. Ms Collis submitted that relationship difficulties are not unusual and uncommon and it would appear in Mr Pearce's case that his relationship problems with Mrs Pearce could not be regarded as exceptional. In any event, Ms Collis concluded that Mr Pearce and Mrs Pearce have decided to pursue the relationship which she noted was a positive step for him and his family.

41.     Mr Pearce submitted that there are a number of things that should be taken into account.  He stated that his gambling and alcohol and drug abuse problems were present after his work accident in a greater presentation than prior to his work accident.  He also noted that his relationship difficulties with his wife were out of the ordinary because of what he described as his drinking and gambling and substance abuse.  He has realised how wrong he has been and he is now trying to do the right thing. 

42.     Mr Pearce asked the Tribunal to consider that his work injury had turned his life around.  He felt that he was not a man any more.  He was not behaving properly and he understood that.  He also stated that he feels ashamed about what he has done and he does not know what happened to him during that period.  He stated that his family are the only people he has left and he does not want to lose them ever again. 

43. I have come to a finding in this matter, taking into account the evidence of Mr and Mrs Pearce, the submissions made by Ms Collis and Mr Pearce's submissions. I also have made my decision as I must do, by applying the relevant legislation, that is the Act, and principally in relation to the issue in this matter, that is section 1184K of that Act, to decide whether or not there are special circumstances which would allow me to treat the compensation payment either as a whole or in part as not having been made.

44.     I reiterate my point earlier in the decision that there was no dispute about the actual calculation of the period of the preclusion period but in any event it is my finding that the preclusion period was correctly calculated and I note that the same finding was made earlier by the SSAT.  In making my decision in this matter I also have obtained some guidance from the case law.  It is clear to me in this matter that Mr Pearce did act in what could be described as an irresponsible manner in the expenditure of his lump sum compensation of $175,000.00.

45.     It is important for that to be emphasised, but one has to look at the circumstances of that expenditure.  It is also clear to me that there was an expenditure on various goods and items beyond what was prudent and necessary, that is in terms of what Mr Pearce purchased for his family by way of furniture, electrical goods, toys and things of that nature, but I also find that there was a gross expenditure of the lump sum compensation by means of spending money on gambling.

46.     It is my view that what Mr Pearce has stated in terms of his gambling and his alcohol consumption, which he said is the worse problem which then leads on to gambling and to the expenditure of funds in circumstances which might not be considered prudent, that that expenditure is more than what Ms Collis referred to as a

lifestyle choice.  Whilst I find that there was alcohol consumption, the use of amphetamines and gambling prior to the work accident, I am also satisfied that given the evidence and Mrs Pearce's evidence, that there was a continuation and in fact escalation of those substance abuse problems and also gambling following the accident in 1995, and in this regard I note that there was a period of detoxification in 1996/1997.

47.     The expenditure was not, in my view, purely and simply a reckless or irresponsible expenditure.  It is more complex than that.  There are other things which must be taken into account and on the evidence which I accept, both from Mr Pearce and Mrs Pearce, there is an element of pathology in the expenditure which takes it out of the usual irresponsible or recklessness.  There is an element of some other contributing factors which have to do with an addiction problem.  These matters cannot be isolated in my view.

48. I also consider that there would be gross hardship provided to Mr Pearce and indeed his family, who are part of this problem, if the preclusion period was to be imposed in full. It is not a situation where this Tribunal should, given the discretion allowed for in 1184K of the Act, disregard the impact that the imposition of the preclusion period would have on Mr Pearce and his family if it were to be imposed in full. I say this with full knowledge and concern about the fact that the public purse should not be abused and that people who are paid lump sum compensation, who are then subject to a preclusion period, should abide by that.

49.     But in Mr Pearce's circumstances I consider that the financial hardship which would be enforced on him if the preclusion period was enforced in full, and in combination with the pathology that he has in terms of his gambling problem, his alcohol and amphetamine abuse, that the combination of those two things, take his circumstances out of the ordinary.  They take them to situations which are special in terms of, as I understand it, the case law.

50.     I also note that there are Tribunal decisions which have considered specifically gambling or drinking problems, and I note specifically in that regard a case Re Males and Secretary, Department of Family and Community Services (1999) 57 ALD 793, and

another case Re Anderson and Secretary, Department of Family and Community Services [2000] AATA 431 in which preclusion periods were shortened and one of the special circumstances in those matters was the addiction to gambling and as I have said, I am of the view that the gambling was not a lifestyle choice, not a personal choice, but something in the form of an addiction and having pathological consequences.

51.     I also note, different to other Tribunal cases, for example, Re Catley and Secretary, Department of Social Security (AAT 12044, 21 July 1997), that in Mr Pearce's circumstances, he is trying to do something about his gambling situation.  He has turned all of his money over to his wife.  He has isolated himself from, as it were, the temptation of being located closer to hotels and associates who may well cause him to fall back on former ways.  He is attempting to take responsibility by repaying in the amount that he is able to afford the fines and other debts that he has.  He is doing this in a small way but when you take those circumstances together, it is an indication that he is attempting, for the first time, and I accept Mrs Pearce's evidence, that for the first time in their relationship, he is actually attempting to take responsibility and to honour the various commitments that he has.  So there is some suggestion of a change of heart. 

52.     I might say that Mr Pearce would do very well to go and see a financial counsellor and also to seek some counselling in terms of the possible substance abuse problems and the gambling problem that he has in order to try and get to the bottom of what is behind those particular issues in his life. 

53. I am also concerned that there are special circumstances in terms of the impact on the family of the preclusion period. The family is having a period of stability. Their financial circumstances are difficult at the moment. If the preclusion period was imposed in full I believe that the financial circumstances would be extremely dire, beyond what could be considered to be straitened and they would be exceptionally bad. Thus, it is my view that the combination of factors that I have detailed make it important in this particular circumstance and these particular constellation of issues that special circumstances should be invoked in relation to 1184K of the Act. Furthermore, having

found that there are special circumstances, I do not think that Mr Pearce should have the preclusion period waived in its entirety.  As I said earlier, the taxpayers should not be burdened by taking away the responsibilities of people who have been paid lump sum compensation payments.  However, I do consider that because of the special exceptional circumstances in Mr Pearce's case, that the preclusion period should be shortened and I believe that the correct balance has been achieved by the SSAT in deciding that the preclusion period be shortened in essence not to apply after 1 July 2003.

54. Thus, for all the reasons that I have outlined, it is my view and my finding that there are special circumstances operating in Mr Pearce's case. In recognition of those special circumstances, an amount of compensation should be treated as not having been made so as to have the preclusion period not extended beyond 1 July 2003. What this means is that in terms of section 43 of the Administrative Appeals Tribunal Act 1975, I affirm the decision of the SSAT.